US Social Security disability fund to run dry next year: Report

[webfact]

Report: Social Security disability fund to run dry next year
By STEPHEN OHLEMACHER and RICARDO ALONSO-ZALDIVAR

WASHINGTON (AP) — The 11 million Americans who receive Social Security disability face steep benefit cuts next year, the government said Wednesday, handing lawmakers a fiscal and political crisis in the middle of a presidential campaign.

The trustees who oversee Social Security and Medicare said the disability trust fund will run out of money in late 2016. That would trigger an automatic 19 percent cut in benefits, unless Congress acts.

The average monthly benefit for disabled workers and their families is $1,017. The typical beneficiary would see a reduction of $193 a month.

"Today's report shows that we must seek meaningful, in some instances even urgent, changes to ensure the program is on stable ground for future generations," said Jo Ann Jenkins, the chief executive officer of AARP.

In more bad news for beneficiaries, the trustees project there will be no cost-of-living increase in benefits at the end of the year. It would mark only the third year without an increase since automatic adjustments were adopted in 1975.

Separately, about 7 million Medicare beneficiaries could face a monthly premium increase of at least $54 for outpatient coverage. That works out to an increase of more than 50 percent.

The annual report card on the financial health of Social Security and Medicare shows that the federal government's largest benefit programs are feeling the strain of aging baby boomers as they both approach milestone anniversaries.

Medicare turns 50 at the end of the month and Social Security turns 80 two weeks later. Together, the programs accounted for more than 40 percent of federal spending last year.

There was some good news in the report: The trustees said Social Security's retirement fund has enough money to pay full benefits until 2035, a year later than they predicted last year. At that point, Social Security will collect enough in payroll taxes to pay about 75 percent of benefits.

Medicare's giant hospital trust fund is projected to be exhausted in 2030, the same date as last year's report. At that point, Medicare taxes would be enough to pay 86 percent of benefits.

Advocates for seniors say that gives policymakers plenty of time to address both programs without cutting benefits. But some in Congress note that the longer lawmakers wait, the harder it gets to address the shortfall without making significant changes.

There is an easy fix available for the disability program: Congress could shift tax revenue from Social Security's much larger retirement fund, as it has done in the past.

President Barack Obama supports the move. And acting Social Security Commissioner Carolyn Colvin said shifting the tax revenue "would have no adverse effect on the solvency of the overall Social Security program."

But Republicans say they want changes in the disability program to reduce fraud and to encourage disabled workers to re-enter the work force.

"Washington has continually kicked the can down the road, and now, as 11 million Americans face cuts to Social Security disability benefits they rely on, it is time for Congress to take action," said Sen. Rob Portman, R-Ohio.

In January, Sen. Rand Paul, R-Ky., suggested that a lot of slackers are on disability. Paul, who is running for president, joked that half the people getting benefits are either anxious or their back hurts.

The date that the disability fund will run dry is unchanged from last year's report. But as the deadline gets closer, advocates say the need to act becomes more urgent.

"The president has proposed a commonsense solution to improve the solvency of this fund in the short run so that Americans who rely on it will continue to receive the benefits they need," Treasury Secretary Jacob Lew said. "It is vital that Congress move forward to maintain the integrity of this critical program sooner rather than later."

If the retirement and disability funds were combined, they would have enough money to pay full benefits until 2034, the trustees said.

Lew noted that the life of the Medicare trust fund has been extended by 13 years since Congress passed Obama's health law. The fund is also benefiting from a slowdown in the rise of health care costs.

The Medicare premium increases would affect Part B, which provides coverage for outpatient services. For about 70 percent of beneficiaries, premium increases cannot exceed the dollar amount of their Social Security cost-of-living adjustment, or COLA. Because no COLA is currently expected for next year, increased costs of outpatient coverage would have to be spread among the remaining 30 percent.

That would result in an increase of about $54 in the base premium, bringing it to $159.30 a month. Those who would feel the impact include 2.8 million new beneficiaries, 1.6 million who pay the premium directly instead of having it deducted from their Social Security, and 3.1 million upper income beneficiaries, those making at least $85,000 for an individual and $170,000 for a married couple.

The increases for upper-income beneficiaries would be higher, up to $174 for those in the highest bracket.

Health and Human Services Secretary Sylvia M. Burwell said no final decision has been made. She said premium increases are expected to average under 5 percent a year over the long term.

Nearly 60 million people receive Social Security benefits, including 42 million retired workers and dependents, 11 million disabled workers and 6 million survivors of deceased workers.

About 55 million retirees and disabled people get Medicare. The hospital trust fund is only part of the program. Coverage for outpatient care and prescription drugs is covered by premiums and other government spending.


-- (c) Associated Press 2015-07-23

[BKKSnowBird]

Maybe they should work on creating more jobs and this problem would solve itself.

[Canucklehead]

I bet they keep increasing the military budget at the same time...... and fund for profit prisons.....

[shirtless]

Why dont the politicians take a haircut for a change no accountability yet again wake up america.

[lostoday]

Maybe they should work on creating more jobs and this problem would solve itself.

U.S. vs. Europe: There's a clear economic winner ......USA

http://money.cnn.com/infographic/news/economy/us-versus-europe-economy/

[lostoday]

I bet they keep increasing the military budget at the same time...... and fund for profit prisons.....

I agree with you. Let the Canadians start paying their fair share. The USA pays 23% of NATO after the U.S., the largest contributors to NATO’s military budget are Germany (16.6 percent); France (12.4 percent); United Kingdom (12 percent); Italy (7.8 percent); Canada (5 percent); Spain (4.2 percent); Netherlands (3.3 percent); Belgium (2.6 percent); Poland (2.3 percent); Turkey (1.8 percent); Denmark (1.7 percent); and Norway (1.6 percent). Fifteen countries make up the remaining 5.8 percent.

http://natosource.tumblr.com/post/6525063731/gates-criticizes-nato-how-much-does-u-s-pay

[Loptr]

The grand entitlement society in the US is failing... This shortfall in SS Disability funding has been known for some time and has only gotten worse as more and more people go on the dole... Unfortunately, this is merely the tip of the iceberg as the estimated US unfunded liability for Social Security, Medicare, Medicaid and the ACA through the year 2100 is over $200 trillion USD...

http://www.npr.org/2011/08/06/139027615/a-national-debt-of-14-trillion-try-211-trillion

The other shoe has already dropped on government employee pension funds, which are estimated to have a $2 trillion USD shortfall, and this is IF the bond market stays healthy, with it isn't...

http://www.zerohedge.com/news/2015-07-18/pension-shocker-plans-face-2-trillion-shortfall-moodys-says

Enjoy it while you can because the party is about over...

[NeverSure]

Let's be clear that this is disability and many if not most are younger people. While some need it, it is also widely abused as is welfare.

This isn't pensioners.

Cheers.

[watso63]

A civilised country takes care of the disabled. How they write the rules and monitor the screening of claimants is the difficult part. Too many people make it a lifestyle choice unfortunately and the truly deserving are the ones that suffer.

[Loptr]

Let's be clear that this is disability and many if not most are younger people. While some need it, it is also widely abused as is welfare.

This isn't pensioners.

Cheers.

I was merely pointing out that the SSDI shortfall in funding is endemic of a larger problem with the US finances... Abuse is rife throughout the system, but no one seems to care as long as they get a check...

[chrisandsu]

The old buggers have been scamming SS for years , I know a guy that has a business that makes plenty of profit but still draws the SS . All you have to do is make out you are only earning $18 k a year and you are fine . It's robbing the younger generation from ever seeing a pension , welfare scroungers come in all shapes and sizes , brown hair or grey !

Edited July 23, 2015 by chrisandsu

[NeverSure]

This is SSI, not SS - Supplemental Security Income, not Social Security. People apply for disability benefits to get it.

[Searat7]

When the economy went south in the USA many more people applied for Social Security Disability....there is serious fraud here. Combining the funds would be the wrong thing to do. Deal with the fraud problem.

[FangFerang]

Many of the arguments here are logical non-sequitors.

If you earn 30k US, of all the revenue you pay as taxes, $4000 goes to subsidize corporations that are already profitable, and that is ten times what you pay in a year for education, and over six times all other payouts from your tax dollars.

I do not approve of my tax dollars subsidizing large corporations, at the expense of education, infrastucture and well-being.

[BKKSnowBird]

When the economy went south in the USA many more people applied for Social Security Disability....there is serious fraud here. Combining the funds would be the wrong thing to do. Deal with the fraud problem.

This is why I say fix the problem and create more jobs. More people paying in and less people applying.

I think most people want to work, even the disabled, but what else to do if you can't find work.

I actually think there is very little fraud. Anyone who has gone through the process knows it is not easy to get approved.

[noitom]

As another poster indicated, before any cuts or discussion of cuts to social security/disability, all the rampant fraud must be wiped out. Millions of dead and nonexistent are collecting benefits, millions who should not be eligible.

[lovetotravel]

Maybe they should work on creating more jobs and this problem would solve itself.

As mentioned before, this is not social security, it's a completely different thing. Though this fund is run by the same department.

http://www.ssa.gov/oact/progdata/describedi.html

The Disability Insurance Trust Fund is a separate account in the United States Treasury. A fixed proportion (dependent on the allocation of tax rates by trust fund) of the taxes received under the Federal Insurance Contributions Act and the Self-Employment Contributions Act are deposited in the fund to the extent that such taxes are not needed immediately to pay expenses. Taxes are deposited in the fund on every business day.

The trust fund provides automatic spending authority to pay monthly benefits to disabled-worker beneficiaries and their spouses and children. With such spending authority, the Social Security Administration does not need to periodically request money from the Congress to pay benefits.

So this has nothing to do with creating more jobs. But as mentioned previously, abuse is rampant. Republicans are trying to do something about the abuse, but good luck getting it passed.

[BKKSnowBird]

This is 100% about creating more jobs.

Jobs pay SS tax. More money coming in.

All agree that when the economy is bad more people apply.

[lovetotravel]

The grand entitlement society in the US is failing... This shortfall in SS Disability funding has been known for some time and has only gotten worse as more and more people go on the dole... Unfortunately, this is merely the tip of the iceberg as the estimated US unfunded liability for Social Security, Medicare, Medicaid and the ACA through the year 2100 is over $200 trillion USD...

http://www.npr.org/2011/08/06/139027615/a-national-debt-of-14-trillion-try-211-trillion

The other shoe has already dropped on government employee pension funds, which are estimated to have a $2 trillion USD shortfall, and this is IF the bond market stays healthy, with it isn't...

http://www.zerohedge.com/news/2015-07-18/pension-shocker-plans-face-2-trillion-shortfall-moodys-says

Enjoy it while you can because the party is about over...

Many other countries are in much worse shape. The US has a fairly good dependency ratio. Japan and Europe have very high rations:

http://data.worldbank.org/indicator/SP.POP.DPND.OL/countries?order=wbapi_data_value_2014%20wbapi_data_value%20wbapi_data_value-last&sort=desc&display=default

https://en.wikipedia.org/wiki/Dependency_ratio

World Bank 2010 Age dependency ratio by country

As of 2010 Japan and Europe had high aged dependency ratios compared to other parts of the world.^[3]

[Tywais]

Maybe they should work on creating more jobs and this problem would solve itself.

Definition of disabled - incapacitated by illness or injury; also : physically or mentally impaired in a way that substantially limits activity especially in relation to employment or education

[Seastallion]

Maybe they should work on creating more jobs and this problem would solve itself.

Definition of disabled - incapacitated by illness or injury; also : physically or mentally impaired in a way that substantially limits activity especially in relation to employment or education

I think his point was that by creating more jobs for the able-bodied, there is a two-fold benefit; Fewer people drawing on unemployment assistance, and more taxes into the coffers. Both outcomes can release funds for the disabled.

But there is also the creation of jobs for people who are disabled in such a way that they can not work in conventional jobs but could work if lateral thinking was used.

There is also a number of disabled people who would be employed if the employer was incentivised...wheelchair access, special chairs, etc. If the government spends $20 000 on a disabled person, it makes sense to instead give an employer $10 000 to employ a disabled person.

[little mary sunshine]

Reevaluate the "disabled". Drunks, druggies deadbeats and

Arthritics that can jog 5 miles a day, but can't work. Throw

About 35% of them off the program .....problem solved for

Those truly,disabled.

[lostoday]

Reevaluate the "disabled". Drunks, druggies deadbeats and

Arthritics that can jog 5 miles a day, but can't work. Throw

About 35% of them off the program .....problem solved for

Those truly,disabled.

You just know this guy gets benefits.

[gecko2112]

U.S. vs. Europe: There's a clear economic winner ......USA

http://money.cnn.com...europe-economy/

Yeah, CNN is a great source of truth. U.S. or Europe? They're both done except Germany who with strong business ties to Russia, will align with the East.

[bil2054]

Notes from a disabled person, who wishes they weren't....
I think that Senator Paul is full of donkey dust on this. I waited too long to apply... went through about a hundred G's of savings because I did not want the official designation of "disabled", and kept trying to find work that I could still do. I had to first get my doctor to submit an affidavit that in his opinion I was not able to work, and why. Then I had to go for a half day evaluation by a government contracted physician. I know of no way to skip these requirements, and if there is rampant skullduggery it is mostly a problem at stage two I would say.
My former neighbour had a heart valve replacement procedure and was turned down twice initially. It is not always a walk in the woods to get certified.
Anyway, I suspect the instances of fraud are certainly more than they should be, but not nearly as prevalent as Paul would have us believe, and more on the line of somebody continuing to cash their father's check after he dies, or improving their health and "forgetting" to inform the government that they have gone back to work.
I think the raising of the income cap would be the simplest solution to keeping the funding going.

[quandow]

All the while Wall Street continues to show record profits.

[CrummyJuggler]

The old buggers have been scamming SS for years , I know a guy that has a business that makes plenty of profit but still draws the SS . All you have to do is make out you are only earning $18 k a year and you are fine . It's robbing the younger generation from ever seeing a pension , welfare scroungers come in all shapes and sizes , brown hair or grey !

I disagree. The businessman paid into social security his entire working life and therefore has earned his distribution whether he needs it or not. Social Security was not set up as a needs based system (as you suggest) and changing the law would require political discourse that will never happen because rich voters lose. They give up something and get nothing in return. I may not need it either when I retire but I am not going to give it up willingly as I have paid into it my entire working life and have earned it.

[Neurath]

As another poster indicated, before any cuts or discussion of cuts to social security/disability, all the rampant fraud must be wiped out. Millions of dead and nonexistent are collecting benefits, millions who should not be eligible.

What do the dead and nonexistent do with it?

[Loptr]

All the while Wall Street continues to show record profits.

The head of JP Morgan / Chase, Jamie Dimon and the head of Goldman Sachs, Lloyd Blankfein have both become billionaires in recent weeks... Too big to fail and too big to jail while the tax payer picks up the tab...

[watso63]

As another poster indicated, before any cuts or discussion of cuts to social security/disability, all the rampant fraud must be wiped out. Millions of dead and nonexistent are collecting benefits, millions who should not be eligible.

What do the dead and nonexistent do with it?

Their loved ones don't inform the authorities and carry on claiming I presume.